The Global Marketing Strategy for Nike in China (Term Paper Sample)

The Global Marketing Strategy for Nike in China
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The Global Marketing Strategy for Nike in China
Abstract
Started in 1964, Nike has set the pace in the fashion apparel and equipment manufacturing and supply positioning it at the top of the rest. They have spread their wings around the world and one of the markets of interest being China. We delve into the global marketing strategy of Nike narrowing it down to China.
This is achieved by looking at the industry overview with some of the brands competing against Nike such as Adidas. The paper further highlights the macro-environment which discusses political, economic, environmental, legal and social factors affecting the penetration of Nike in China. The country of origin, the United States of America, and its significance and impact on Nike's success or failure in China. The discussion further illustrates how segmentation, targeting, and position have helped in the brand's growth with cultural and visual aspects also considered. Its performance is measured through reports and eventually recommendations offered on how it can establish itself further.
The research identified the huge population of China, 1.4 billion, has aided Nike in its growth in China. Segmentation of the population has also enabled them to target the younger population most of whom use WeChat which is being used by around 1 billion individuals through tailored adverts to fit them. Reduced taxes on foreign businesses helps them to thrive further. Some of the main problems they face include increased competition from Adidas who have established a niche market by offering more fashion products as compared to sports products offered by Nike. Recommendations of how to fight off the growing competition and various issues are also indicated.
Brand Overview
Nike has set the pace as one of the companies with substantial influence in the designing, marketing, and distribution of a range of products from athletics shoes, clothing, equipment, and other fashion products. They are above Zara, Louis Vuitton, Gucci, and Adidas in the pecking order. Based in the United States, the company boasts an employee base of around 73,100 individuals helping the company into revenues of 10.2 billion dollars, one of the reasons putting it at the top of the stack of fashion companies.
Its presence is nearly in all countries worldwide, with its retail stores helping in the selling of the products and other distributors and licensed wholesalers helping in selling of Nike's products. Its customers range from kids and adults most especially in soccer and basketball field with an additional market driving them to volleyball, hockey among others. They have also invested heavily in digital media with stores available online where one can purchase products that get delivered on their doorsteps.
John Donahoe is the current Chief Executive Officer for the company that started back in 1964. He has worked as CEO for big brands such as eBay and PayPal.
Nike's North America region provides the most revenue since the start of 2015 with the Asia Pacific and Latin America the least in terms of revenue. North America accounts for nearly 16 million dollars with Pacific and Latin America collectively accounting for 5.2 million dollars.
Industry Overview
Nike exists in the fashion industry which deals with cloth making and apparel. The industry has grown over the years to become a billion-dollar industry with people investing in it due to its profitability and traction. It has grown from the traditional handcrafting to the current machine-based mass productions to easily meet the needs of the growing population and demand for designed outfits and shoes. The fashion industry is placed at a net worth of 2.4 trillion dollars ("The State of Fashion 2017", 2020). It has gone on to be the biggest employer in the united states accounting for nearly 111, 000 employees in the apparel field.
It is broken down into textile design and manufacturing which entails the production of raw materials in the form of fabrics to aid in the end product production of apparel. The demand determines which fabrics to use, cotton, silk or wool with sophisticated technology being applied to get a better outcome. The innovativeness drawn from fashion shows and films have produced leading designers such as Calvin Klein who are setting the trend and giving the fashion industry an edge.
After design and manufacturing, the aspect of promoting, marketing and retailing comes in. The need to gain profits by selling the end product drives the company into marketing and promoting the products to maximize profits through 'massaging' the customer's interests. The target customer base is identified through research and products tailored to their needs and preferences. Several marketing channels are used with the media and most recently influencer marketing through celebrities including footballer and basketballers.
Macro Environment
Macro-environment entails factors that affect the running of a business in a certain country either positively or negatively. They are divided into political, economic, social, technological, legal and ecological/environmental factors.
China has grown considerably in terms of demand for fashion products. The growing population which is at almost 1.4 billion people and the disposable income has played a role in the demand for fashion products. Digital media growth in the country is another advantage that has made China an attractive market for big brands such as Nike.
Analysis of China Macro Environment
Political factors
Government control and regulation is one of the major issue plaguing the fashion industry in the country. Corruption and high-handedness from the top political forces are driving foreign firms out of business in the country and affecting Nike in particular. The up-down graph in Nike sales in China affects its strategy.
'Cold-war' with the United States with each country aiming to show its superiority is affecting businesses owned by the US in the country a great example is Nike. This has led to restrictions to foreign firms especially those originating from the US.
Economic factors
China's purchasing power has increased considerably arising from being one of the tops in Nominal GDP. This has led to an increase in disposable income among the Chinese population.
The availability of cheap labor in the country has helped Nike in maximizing profits. With the living costs of China being among the lowest in the world, individuals can afford to take lower wages and sustain themselves making it a merit to Nike. China’s capability to produce a huge number of products at one given time due to its industrial/factory base helps keep the Nike brand competitive enough.
Competitiveness across China in terms of businesses has led to price wars between Nike and Adidas forcing it to reduce its prices by nearly 12 percent to keep at par (Distelhorst, 2017).
An increase in the inflation rate has affected Nike's revenue in the country due to the demand for better pay from employees and the COVID-19 pandemic. At 2.51 percent in 2020, China has experienced a rise from 2.28 percent in 2019 threatening the foreign market (Ramelli, 2020).
Social factors
At 1.4 billion, China leads in being the most populated country in the world (Holden, 2016). This has led to a rise in consumer numbers in the country. The need by citizens to show their status has pushed them into purchasing luxurious products to demonstrate their capability making Nike an attractive aspect for them thus pushing Nike’s sales.
The literacy levels of the country have been on the rise hitting 96.4 percent making most of the population gain knowledge on the availability of Nike products in the market and their merits. An aim to lift the poverty-stricken population completely by 2020, China has managed to lift nearly 68 million people which has ensured that the purchasing power shoots.
The aging population in China is at 241 million people accounting for 7 percent of the population (Lu, 2017). This has impacted negatively on the available labor to help in the manufacturing and production of products making Nike feel the pinch of it all.
Technological factors
China is the leading internet consumer in the world, with a total of 890 individuals using the internet which accounts for nearly 56 percent of the population (Zeng, 2016). This gives Nike a competitive edge due to its expansion to cover the digital age and keep up with the technological changes.
Improvement in the production technology with most of the processes being automated ensuring a quality product and mass production has also played a role in the growth of Nike in the country.
Legal factors
Intellectual property law has affected businesses in China with the need to store your data in China becoming a fear for many due to revealing of the trade secrets. There has been the uneven implementation of the law which points to favoritism leveled against U.S companies. The porous nature of the data privacy has led to an influx of cheap fake products in the market imitating the original Nike products reducing the market for them.
Laws requiring companies to increase employee salaries and benefits have also come into force increasing Nike’s expenditure in line with the laws leading to a reduction in the profits.
Environmental factors
China is one of the most polluted countries has put efforts in place to curb the menace emanating from industries. Amo...